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Realogy CEO: remote work is here to stay, but home price growth is real
Brokerage giant beats estimates, reporting $2.3B in revenue, 85% y.o.y. surge in transactions
Realogy’s continuing to ride the housing market’s strong wave and welcomes a work-from-home future.
The brokerage giant reported nearly $2.3 billion in revenue in the second quarter, an 81 percent jump over the same period last year, when activity in many housing markets was frozen due to lockdown restrictions.
The company logged its fourth consecutive quarterly gain in transaction volume, up 85 percent from the second quarter last year and up 41 percent from the same period in 2019, said president and CEO Ryan Schneider on an earnings call Thursday.
Overall, Realogy reported a net income of $149 million for the quarter, compared to a loss of $14 million in the same period last year.
Schneider attributed the growth to rising home prices, New York City’s recovery and strong luxury sales, noting that Sotheby’s was the company’s top-performing brand.
“Frankly, if there was more supply available we could sell it,” he said. “We believe that unlike 15 years ago, the large price increases we’re seeing today are not speculation. They represent real demand for housing.”
The company reported more than $2 billion in expenses, with commission and other agent-related costs accounting for more than half of Realogy’s spending last quarter. That is due in part to agents with higher splits handling most of the transactions, according to Schneider and chief financial officer Charlotte Simonelli. The company expects to trim $80 million in expenses over the course of the year and says it has saved $50 million thus far.
Schneider also weighed in on the future of remote work. Pointing to Realogy’s corporate relocation business, Cartus, which services Fortune 500 companies, he said the “number one long-term headwind” for the relocation industry hinges on how much domestic U.S. business disappears due to remote work.
“Part of the reason I sit here and tell you that I think work from home is a more ‘here to stay’ thing maybe than the average person would say is because it is some of what we hear from our clients,” he said.
Schneider emphasized that Cartus’ business is primarily international and said he expects that part of the industry to continue to grow globally.
He added that remote work is a positive trend for Realogy, because it “really pushes people to live in different houses or different geographies.”
The chief executive also mentioned RealSure, the iBuyer business Realogy launched in 2019 with single-family rental company Home Partners of America, as a promising source of new growth. The business is now operating in 21 markets, up from 13 in the first quarter, and is helping agents win listings, according to Schneider.
He called Blackstone’s $6 billion acquisition of HPA last month a “vote of confidence” and said Realogy has been seeing “encouraging results” from RealSure so far.
“We really think we’ve got a winner here,” he said.
By 11:15 a.m. Thursday, Realogy’s share price had jumped more than 3 percent from the morning’s open to $19.28.